Welcome to the Catena Media Q1 2026 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to CEO Manuel Stan and CFO Michael Gerrow. Please go ahead.
Good morning, good evening, everyone. Welcome to Catena Media's Q1 interim report. I am Manuel Stan, and today I'm joined by our Chief Financial Officer, Mike Gerrow. Today, we will be speaking to our Q1 interim report, related financials, and our strategy and outlook going forward. We will start today's presentation with a high-level summary of the most important developments in the quarter. I am pleased to see another solid quarter with strong revenue, and more importantly, continued efficiency translating into a strong bottom line. Q1 revenue amounted to EUR 12.3 million. This represents an improvement of 26% versus the same period last year, and 21% down versus last quarter. While this is a decline from a very strong Q4, it is a significant step up from Q1 previous year.
The adjusted EBITDA almost tripled to EUR 2.7 million from EUR 0.9 million the corresponding quarter last year. This meant lifting the margin to 22%, up from 9% the same period last year. This was our third consecutive quarter with adjusted EBITDA margin over 20%. We continue to focus on operational efficiency and diversification. The diversification efforts continued, and performance marketing channels showed another strong quarter, albeit a step down from the all-time high registered in Q4. Our disciplined cost management approach continued in Q1. Normalized for direct costs and incentive programs, the year-on-year comparable costs have decreased with 26%. From geographical perspective, the share of revenue coming from North America remained relatively unchanged at 95%, reflecting our focus on this geography. While we continue to evaluate other geographies, North America remains our core focus for the immediate future.
New depositing customers increased by 88% year-on-year to 34,573 customers. Overall, even though we saw a decline from a very strong Q4, we are pleased with the performance this quarter and remain confident in our trajectory. Moving on to operational developments. Performance marketing channels remain a very strong area for us as we see solid performance all different channels. To further accelerate the success of the CRM channel, in early January, we launched Play Perks, our first group-wide loyalty initiative designed to improve user engagement and loyalty. We have plans to expand such products to other products in the coming quarters. In January, we have also announced the launch of Marketplace Plus. This is a strategic evolution of our sub-affiliate platform, offering tailored marketing support, advisory services, and potential working capital solutions to sub-affiliate partners.
From tech perspective, we continue to invest in our central platform and continue the consolidation of our top-tier products. The employee Net Promoter Score recorded the highest level since June 2022, having improved over 50 points in the last 12 months. Organic search faced headwinds post-algo update. We will discuss in more detail on the following slide. Moving on to the organic search score. As mentioned, the organic search performance softened post-December algo update. The performance has mostly stabilized in the second half of the quarter. As you can see in the graph, the average keyword ranking score for the quarter decreased slightly in the first part of the quarter, but since then stabilized. It is worth noting that the algorithm changes have temporarily elevated some low relevance products that provide little user value. We expect Google's continued quality focus refinements to correct this over time.
I will now hand over to Mike for an in-depth update on our financial performance.
Thank you, Manu, and good day. Looking into our Q1 financials, Q1 showed solid growth compared with last year, but was some way below our particularly strong results in Q4. Q1 revenue was EUR 12.3 million, representing a 26% year-on-year increase and a 21% quarter-on-quarter decrease. Adjusted for foreign exchange rate fluctuations, year-on-year revenue was up 41%. North America contributed 95% of group revenue in the quarter. Adjusted EBITDA was EUR 2.7 million during the quarter. This was a 43% decrease when compared to the very strong Q4 2025 and a 191% increase versus Q1 2025. This quarter's performance represents a more sustainable baseline for us to continue building on in future quarters.
New depositing customers increased 58% year-on-year, driven by stronger contributions from our core brands and from the growth of sub-affiliate partners on our marketplace platform. Moving on to our segment performance. In Q1 2026, our casino segment contributed 88% of revenue, with the sports segment contributing 12%. Casino revenues grew by 43% versus Q1 2025. This growth was spread across regulated and sweepstakes casino operators. Casino NDCs increased by 98% versus Q1 2025 and decreased by 19% versus Q4 2025. Adjusted EBITDA in the casino segment increased by 12% versus Q1 2025 and decreased by 45% versus Q4 2025. This reflects the year-on-year success of our efforts to diversify revenue sources to include a greater share of paid marketing channels, including sub-affiliation. Sports segment revenues decreased by 34% versus last year to EUR 1.5 million.
This reflects continued underperformance, but also the divestment of our esports products in late Q2 2025. New Depositing Customers decreased by 17% versus Q1 2025, but increased by 15% versus Q4 2025. Adjusted EBITDA in sports grew significantly versus last year's losses to a satisfactory 30% margin. The growth in adjusted EBITDA is primarily related to the delivery of our cost optimization program measures. Continuing on to our cost development, the total cost base was EUR 9.7 million in the quarter. This represents a year-on-year increase of 8% and a quarter-on-quarter decrease of 11%. Direct costs increased by 110% versus Q1 2025. This reflects our progress in diversifying revenue to include a larger mix of performance marketing channels, including paid media, CRM, and sub-affiliation versus last year. Direct costs decreased by 22% versus Q4 2025.
Excluding the increase in revenue-driven direct costs, the cost base decreased by 16% versus Q1 2025. Personnel expenses decreased by 18% versus Q1 2025 and decreased by 2% versus Q4 2025. It's important to note that if we normalize personnel expenses to include EUR 800,000 of bonus accruals taken in Q1 2026, basic personnel expenses decreased by 32% versus Q1 2025. We included a gray section in the chart to separate the incentive program accruals versus the continued decrease of fixed cost personnel expenses over the quarters. Other operating expenses decreased by 12% versus Q1 2025 and decreased by 11% versus Q4 2025. Normalizing the cost base for direct costs and incentive programs, the year-on-year comparable costs have decreased by 26%.
During the quarter, we've started implementing an administrative streamlining program that will yield the simplification of our legal structures and the liquidation of entities outside of Malta and the U.S. We recognized EUR 100,000 of items affecting comparability during the quarter, which were primarily related to this program. Moving on to our financial position. Total operating cash flow from continuing operations was EUR 4.4 million in the quarter, increasing from EUR 3.2 million in Q1 2025. Our resulting cash and cash equivalents balance at the end of March was EUR 13.7 million. We do not have any remaining debt instruments after the repayment of our senior bond in Q2 2025, but our hybrid capital security, with a nominal value of EUR 44 million, has interest costs of approximately EUR 1.4 million per quarter.
We have deferred interest payments since July 2025, and the accumulated interest now totals EUR 5.4 million as of April 10th, 2026. We expect to continue deferring interest payments on the hybrid capital securities in order to maximize flexibility for effective capital allocation, including creating scope for investments that support strategic opportunities and revenue growth. I will now hand back over to Manu to give us an update on the strategy and outlook.
Thank you, Mike. We will now have a look into the strategy and outlook for the next quarters. As we have presented over the last quarters, our strategy is based on a three-pillar model focused on people, product, and profit. From people perspective, the most important developments in the recent period included the employee Net Promoter Score recorded the highest level since June 2022, having improved over 50 points in the last 12 months. The return to office program, initiated in early October, is now fully implemented across both our European and North American offices. The first company-wide bonus paid in several years awarded following the partial achievement of the annual performance criteria. From product perspective, some of the key developments included the continuation of the diversification efforts. The performance marketing channels showed another strong quarter, albeit a step down from the all-time high in Q4.
Play Perks loyalty program was launched on playusa.com in mid-January, aiming to improve user engagement and loyalty and user load. This is planned to be expanded to other brands in the near future. Marketplace Plus launched in January, expanding publisher partner framework with marketing support, advisory services, and potential investment opportunities. Continued investment in our central platform, as majority of our top-tier products are now consolidated on a single platform. Our third and last strategic pillar is profit. The adjusted EBITDA margin remains strong at over 20% for the third consecutive quarter. Normalized for direct costs and incentive programs, the year-on-year comparable costs have decreased by 26%. Direct costs saw a drop in Q1 as a result of the dip in the performance marketing channels. EUR 0.8 million accrued for short-term incentive program demonstrated the company's confidence in reaching the annual targets.
Moving on to the market status. The era of rapid sports and casino launches is largely behind us. The Q2 2022 Ontario sports and casino launch was the last combined market to launch in North America. That represents a gap of over four years. Alberta is scheduled to launch online casino and sports betting on July 13th of this year. That is the first combined sports and casino launch since Ontario. With the addition of Alberta, the share of U.S. and Canada population living in a regulated sports betting state or province is 51%, while for casino the share is 17%. This represents a great opportunity in the market. Prediction market has emerged as a strong alternative in the sports vertical, accessible nationwide. Lastly, let us recap the key takeaways from our report. Revenue was up 26% year-on-year and down 21% quarter-on-quarter.
While this represented a decline from a very strong Q4, it was a significant step up from Q1 previous year. Adjusted EBITDA almost tripled to EUR 2.7 million, lifting the margin to 22%, up from 9%. This was our third consecutive quarter with adjusted EBITDA margin over 20%. Organic search performance softened post-December algo update. The performance has mostly stabilized in the second half of the quarter. The revenue diversification efforts continued during the quarter. A key event was the launch of Play Perks on playusa.com, our first ever loyalty program. This is planned to be expanded on other brands in the future. Since announcing the launch of Marketplace Plus, we have built a strong pipeline of opportunities that are currently being reviewed. We expect to begin deploying capital in the near future.
The April 2026 hybrid interest payment was deferred, bringing the accumulated deferred interest costs and interest to EUR 5.4 million. Interest payments are likely to remain deferred as capital is directed at strategic priorities. While Q1 showed a decline from a very strong Q4, we are pleased with the year-on-year trajectory and with another efficient quarter with adjusted EBITDA margin over 20%. Thank you very much for listening. I will now hand over to Mike to move on to the Q&A section of our call and open up for questions.
Thank you, Manu. We'll now open it up for questions from anyone on the line.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad.
All right. Doesn't look like we have any callers in today to ask questions. I think we'll go with some of the written questions that were submitted to us. Move over to those for now. All right. Manu, one question was, Q1 revenue softened from Q4. Was Q4 a one-off?
Thank you, Mike. Q4 2025 was a particularly strong quarter with all our channels and products performing very well at the same time, while Q1 was a more balanced quarter and sets a more representative baseline for future periods. I think the trajectory matters more than any single quarter. If we're looking back a few quarters ago, the revenue was in the EUR 9 million-EUR 10 million range, and the margin was a single-digit range. If we're looking at the last three quarters, we're consistently above EUR 11 million-EUR 12 million range in terms of revenues, and our margin is consistently over 20%. Year-over-year, Q1 grew 26%, and adjusted EBITDA grew almost triple to 191%. This is a substantial improvement, and that's what I'm focusing on.
All right. Thanks, Manu. The next question was, are you satisfied with the Q1 performance?
Thank you, Mike. I think similar to the previous answer, Q1 was a good quarter. The year-over-year revenue grew 26% and adjusted EBITDA growth 191% with the margin reaching 22%. I think speaking about the margin and the efficiency, we also highlighted the EUR 0.8 million accrued for short-term incentive programs. If we exclude that, the margin for the quarter would have been 28% for about EUR 3.5 million adjusted EBITDA. I am satisfied with the Q1 performance. The only reason why the quarter was a little bit softer is because of a comparison with a particularly strong quarter. Also, as we said, we faced headwinds from a Google Search algo update at the end of last year, which has softened our performance in the first part of the quarter.
As we've said, that stabilized throughout the quarter. All in all, I'm pleased to show a double digit growth from last year and also the adjusted EBITDA showing consistent good performance over 20% for a third consecutive quarter.
All right. Thank you, Manu. One final question I think that's coming your way, which is, what are your hopes for the Alberta market launch?
I think as we said, Alberta opens up on July 13, and it's the first time for since Ontario, since April 2022, when we have a joint casino and sports market launch. It does represent a significant opportunity. We intend to capitalize through our core brands and also through our marketplace sub-affiliate network. Our sub-affiliate partner base in Canada is very strong, so we're looking forward to the launch. I think last comment, Alberta is an opportunity stronger than what we've seen in the U.S. Another reason for that is also the way the legislation works, which will require customers to sign up accounts again. Obviously from affiliate perspective, this represents a greater opportunity than a state launch in U.S. Yes, we're very excited about the Alberta launch.
All right. Thanks again, Manu. There's a couple of questions that also came in that are directed more towards my area, I'll kind of read those and then provide my response. The first one was why did personnel expenses include a short-term incentive program accrual already in Q1? Overall in Q1, we began making provisions towards the 2026 bonus program, and that reflects both our confidence in the operating strategy and also our team's efforts towards meeting their budget targets, essentially. We're just following the standard accounting procedures for making accruals for likely future events. If you exclude that accrual, the personnel expenses decreased by 36% year-over-year, and including it's a little bit less.
This is just a consistent approach with how we treated incentive programs in the past when it looks likely that the cost will be incurred. Another question, which is why did your cash position decrease to EUR 13.7 million down from EUR 24.6 million a year ago? I'll give a bit of context on the background of why we had a cash balance that high a year ago, despite performance not being the best situation. A year ago, this time around, we received the majority of the proceeds from divesting a number of assets, which were earmarked to be used towards repaying our senior bond debt, which we did in Q2 2025. Overall, kind of comparing different things, one is cash from operating, and one is cash from divesting assets.
The operating cash flow from continuing operations this quarter was EUR 4.4 million, and it was up from EUR 3.2 million in the previous year. The business is generating cash, and with no senior bond debt and no hybrid interest currently being paid, we have adequate liquidity to fund our growth initiatives from the operating cash flow that we're generating. I have another note question here, which is why do you still report continuing operations? Is there still a discontinued operation that is noteworthy? This is just a requirement according to international financial reporting standards, as some of the comparable periods from the past have some minimal discontinued numbers. They aren't significant at this stage, and they'll most likely go away in the coming quarters.
Just a matter that we do have to disclose those because of the comparable periods. There's nothing significant in those at this time. There's one more question on my end, which is do you have a timeline for when you'll start addressing the situation concerning the hybrid bond? No, we've not set a fixed timeline. Essentially, we're expecting to continue deferring this and to direct available capital towards technology and other strategic priorities. As performance develops, we'll continue to evaluate what the right capital structure is for the business, and we'll review that regularly and evaluate what's the right thing to do going forward. We've actually had another question come in for Manu now, that is, you've now returned to growth while significantly improving EBITDA margins.
Looking ahead, what gives you the strongest confidence that this turnaround is structurally sustainable rather than just a short-term recovery?
Thank you, Mike. That's a great question. I think there are two key things. One is our diversification efforts. As we said for the last few quarters, we're reinvesting in our traditional SEO part of the business, but also putting a sizable amount of effort and capital into deploying other areas of the business that include paid media, CRM, sub-affiliation to grow in parallel. Unlike previous periods, we're not putting all our basket, all our eggs in a single basket, but we have diversified the business to a good level at this point, and we continue to do that. Obviously you can see the direct costs, how that has shifted over the last few quarters so that would give you a good understanding of how much we are continuing to invest on that.
I think that's the strongest part, that we do have a more diverse business right now and we regardless what happens in one part of the business, which we still have other segments of the business that should continue to perform well and improve. As we've seen in this quarter with being somewhat hit by the Google Algo updates in the first part of the quarter. Secondly, I think we've put ourselves in a lean situation with our cost base being pretty flat over the last few quarters, even though Mike explained the somewhat movement in the last two quarters. We do have that base, the personnel cost of EUR 3.5 million-EUR 3.6 million that we expect to carry on in the next future, in the next quarters.
From cost perspective, we do not see any changes in there. I think the diversification plus the lean cost fixed base is putting us in a good position to expect further growth and continue to be efficient.
All right. Thanks, Manu. That was the last question, so that's the end of our question period. I'll hand it back over to you for some closing remarks.
Great. Thank you, Mike. As we said, revenue was up 26% year-on-year and down 21% quarter-on-quarter. While this represented a decline from a very strong Q4, it was a significant step up from Q1 previous year. Adjusted EBITDA tripled to EUR 2.7 million, up from EUR 0.9 million, lifting the margin to 22% up from 9%. This was the third consecutive quarter with adjusted EBITDA margin over 20%. Organic search performance softened post the December algo update. The performance has mostly stabilized in the second half of the quarter. The revenue diversification efforts continued in the quarter, and the key event in the quarter was the launch of Play Perks on playusa.com, our first ever loyalty program.
Since we announced the launch of Marketplace Plus, we have built a strong pipeline of opportunities that are currently being reviewed, and we expect to begin deploying capital in the near future. April 22, 2026 hybrid interest payment was deferred, bringing the accumulated deferred interest to EUR 5.4 million. Interest payments likely to remain deferred as capital is directed at strategic priorities. Lastly, while Q1 showed a decline from a very strong Q4, we are pleased with the year-on-year trajectory and with another efficient quarter with adjusted EBITDA margin over 20%. I would like to thank you all for joining today's call, and looking forward to hosting you for our Q2 report on August 11, 2026. Thank you very much.